Power deal threat to metal plant

Anglesey Aluminium is searching for a cheaper electiricty source, with the closure expected of the neighbouring Wylfa nuclear power station.

More than 500 jobs are at risk at an aluminium plant after the company failed to secure a deal for a new electricity supply.

Anglesey Aluminium Metal (AAM), one of the area's biggest employers, is to end smelting in Holyhead in September.

The company relies on power from the nearby Wylfa nuclear station, which is due to close next year. It denied its decision was due to a market downturn.

Politicians have warned of a "dreadful" social and economic cost if it closes.

Anglesey Aluminium uses 12% of all the electricity supplied to Wales, and is believed to be the biggest single user of electricity in Britain.

But with the planned closure of Wylfa's nuclear plant in 2010, AAM has been forced to examine other power supply options.

ANGLESEY ALUMINIUM FACTFILE

Anglesey Aluminium opened in 1971

Its 255 megawatt power supply is sourced from the nearby Wylfa nuclear power station, which also opened in 1971 but is decommissioned in 2010

The company is owned by Australian-owned Rio Tinto Plc and California-based Kaiser Aluminum & Chemical Corp

Its 140,000 tonne output includes billet alloys, rolling blocks and ingots for the European market.

In a statement on Thursday, the joint owners of the metal plant, Rio Tinto Alcan and Kaiser Aluminium said it anticipates that smelting operations will end in September 2009, when its current power supply contract finishes.

The company said it will now enter consultation with staff, but has yet to outline how many jobs are under threat.

However, AAM said it would "evaluate alternative operating activities" at the plant, including the continuation of remelt and casting operations at Anglesey.

David Bloor, managing director of Anglesey Aluminium, said: "We have worked hard over many months in our efforts to extend the existing power contract beyond September of this year but have not yet been successful."

"The operation is dependent for its power on the nearby Wylfa nuclear power station which is itself due for closure within the next few years.

"We are fully aware of the significant impact on the workforce and on the local community and will work with partners and stakeholders to develop other long term options in line with existing operations, the needs of the local community, and the economic market situation."

The company also said it would continue to "pursue alternative sources of affordable power".

But it stressed "no sources have yet been identified" that would allow smelting operations at the plant to continue.

The UK government's Department for Business, Enterprise and Regulatory Reform (BERR) also blamed problems in the international market for the company's decision, but this was denied by AAM.

"It is highly regrettable to hear the news that as part of Rio Tinto's restructuring plans and downturn in the international aluminium market the smelter may to close at end September this year," said a BERR spokesman.

"Any agreement on an energy contract between the Nuclear Decommissioning Agency (NDA) and Anglesey Aluminium Metals is a commercial matter between the two parties."

The NDA, which is responsible for Wylfa power station, said European legislation had prevented it from reaching a power supply agreement with the aluminium plant.

A spokesperson said: "We can confirm that we have had discussions with Anglesey Aluminium regarding their wish to continue receiving electricity from Wylfa at a rate lower than the market value.

"But the European Union state aid rules prevents us from coming to an agreement.

"Under this law, governments are not allowed to give overt subsidies to private companies to make a profit."

However, Anglesey MP Albert Owen said he believed an interim deal on power could still be reached.

"Energy prices every domestic user knows have doubled last year and has fallen back this month.

"So the climate this year is different to what it was six months ago. And both sides want to get the best deal for their company."

New arrangements

Mr Owen added: "And that's what we can do as politicians is to mediate and to get that important social dimension into the equation as well and not just talk about pure economics.

"The social cost of the closure of Anglesey Aluminium would be dreadful not just for Anglesey but for the Welsh and UK economy."

Andy Richards, Unite regional secretary wants urgent talks, saying that the plant has been "a cornerstone" of the Anglesey economy for 30 years.

"Closure as a result of the loss of the power contract would mean the further loss of over 500 jobs, the vast majority being Unite members.

"The origins of this worrying news about Anglesey Aluminium pre-date the current economic crisis, which is why Unite has been calling for the government to make the important decisions needed on energy supply for years."

An assembly government spokesman said: "Welsh Assembly Government officials - together with colleagues from the Department for Business Enterprise and Regulatory Reform - are working closely with Anglesey Aluminium's management to look carefully at every possibility of securing new arrangements for the plant's power supply.

"There is a range of options to examine, and we are determined to explore every possible means to continue operations beyond the end of its current energy contract with Wylfa power station."

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.